Press Conference by Prime Minister Kishida Regarding Economic measures
[Initial remarks by Prime Minister Kishida]
A short while ago, I conveyed to the Policy Research Council Chairperson of the Liberal Democratic Party and his counterpart of the Komeito Party that I will instruct at a Cabinet meeting tomorrow the formulation of a package of economic measures by the end of next month. I requested the ruling parties to also sufficiently examine the measures and make proposals to the Government. Two major objectives will be set for this package of economic measures. As shown over there, the first objective is to appropriately return the fruit of growth to the people suffering from the soaring commodity prices. Regarding this point, I would like to note that the economic situation is improving after overcoming the three years of difficulties caused by the COVID-19 pandemic. We are now seeing a wage increase of 3.58% being realized, while achieving the 100-trillion-yen capital investment in nominal terms and filling the 50-trillion-yen gap between demand and supply. The tax revenues are on the rise. On the other hand, the people, who overcame the COVID-19 pandemic, are now suffering from the soaring commodity prices. Now is the time when we should return the outcomes of this growth, such as tax increase, to the people through the implementation of economic measures.
The second objective, as shown here, is to vigorously implement policies to ensure that the emerging historic shift from a cost-cutting economy that has lasted for 30 years in Japan will be steadily achieved. Described by an expert as “cold temperature economy,” Japan’s economy has cut down on investment in people and wages, as well as even investment in the future through capital investment and research and development investment, resulting in stagnant consumption and investment. However, we are finally at a turning point where we can seize an opportunity to exit from this “cold temperature economy” and shift to a new “suitable temperature economy” with its economic energy felt by realizing a virtuous economic cycle through active capital investment, wage increases and investment in people. We cannot afford to miss this opportunity. The Kishida administration will set the next three years as a period of reform, in which we will focus primarily on the strengthening and sophisticating the economy’s capacity for supply through corporate metabolism, including promoting investment in the future and nurturing startups. Our initiatives will include the three-pronged set of labor market reforms, revitalization of consumption accompanied by sustainable wage increases, DX (digital transformation) and GX (green transformation). What is important in doing so is to get off to a quick start. Looking at the current situation, the people are suffering from the soring commodity prices and instability prevails with personal consumption and capital investment lacking strength. In addition to various measures to provide benefits, we will mobilize all available methods, such as reducing burdens regarding taxation and social security, to clarify and ensure the direction of our initiatives for shifting to a new economic stage full of energy. By implementing the economic measures, we will ensure that our economy will not return to the “cold temperature economy.”
In order to steadily achieve these two objectives that I have just mentioned, I would like to place emphasis on five pillars in this economic package as shown here. The first pillar is to take measures to protect the people’s lives from the current surging commodity prices. The second is to achieve sustainable wage increases, including those in regional areas and at small and medium-sized enterprises, while also achieving income increases and regional growth. The third is to promote domestic investment that contributes to the strengthening and sophistication of growth capacity. The fourth is to initiate and promote a social reform that helps overcome declining population and turn change into strength.
The fifth is to ensure security and safety of the people through building national resilience and disaster prevention/reduction, among other measures. With these five items set as pillars, we will formulate the package of economic measures. We will vigorously work to finalize the measures based on close collaboration between the Government and the ruling parties. Once we have finalized the package of measures, we will immediately compile a supplementary budget to finance the measures.
I have repeatedly stated that we should implement economic measures with a sense of speed. For this reason, we have already introduced a program for providing subsidies to reduce gasoline prices. In the same way, in light of responding to the need to increase income for younger generations and the shortage of manpower, we will finalize within this week a package of measures to help overcome the disincentives for second earners regarding their annual income, known as the “barrier of annual income,” so that we will be able to put them into action next month, when the minimum average income of over 1000 yen per hour will be introduced. More specifically, with regard to the “1.3 million yen barrier,” we are promoting the expansion of employee insurance coverage, while the Social Security Council is currently studying a pension system reform for the next stage, but we will first vigorously take support measures to help overcome the “1.06 million yen barrier.” Specifically, we will create an allowance program to promote social insurance application so that business owners will provide an allowance to the second earners of married couples to prevent their take-home income from decreasing as their annual income exceed the 1.06 million yen barrier. In addition, we will create a new subsidy program that will provide up to 500,000 yen per employee to business owners who have taken initiatives to increase their employees’ income through wage increases. With these support programs in place, the Government will effectively reduce social insurance premiums, and even if they exceed the “barrier,” their take-home income will increase in proportion to the increase in their salary income. The Government will support all citizen wishing to overcome the “1.06 million yen barrier.” To this end, we are targeting not only those who are already facing such “employment barrier” based on their current wage levels and working hours, but also all those who may eventually face such “barriers” in the future. We will therefore establish a system to flexibly support people in overcoming their barriers by taking budgetary measures for this purpose.
Regarding the strengthening of capacity for growth, which is an important part of this economic package, we will convene a meeting of the Council of New Form of Capitalism Realization the day after tomorrow (September 27) to discuss a series of key items regarding sustainable wage increases and the promotion of domestic investment such as : strengthening the tax reduction system for wage increases with a view to strengthening the capacity for growth, promoting domestic investment in strategy areas, and introducing a tax reduction system for patent income and others, as well as studying ways to enhance tax reduction measures for stock options.
Let me add that today, Lecanemab was approved as a treatment drug for dementia. This revolutionary new drug that targets the causative agent of Alzheimer’s disease has ushered in a new era in the battle against dementia. On the same day (September 27), we will launch the Council for the Realization of an Aging Society that Addresses Dementia, and will deepen our examination toward the comprehensive promotion of measures regarding dementia. Additionally, in order to swiftly implement support measures for children and child-rearing based on the Children’s Future Strategy, which was formulated in June, we will start implementing initiatives wherever possible. We will hold a meeting of the Children’s Future Strategy Council early next month.
In this way, while prioritizing the formulation of the package of economic measures, we will address the issues that cannot be postponed one by one with a view to creating a Japan that turns change into strength.